Hongfa(SH:600885) Guotai Junan Securities·2024-09-18 08:11Investment Rating - The report initiates coverage with a "Buy" rating for the company [3][6][16]. Core Views - The company is a leading player in the global relay industry, benefiting from the rapid development of the renewable energy sector and the recovery of the automotive and home appliance industries. The company is also actively expanding its product lines, particularly in low-voltage electrical products, to create a new growth curve [3][4][16]. - The projected net profits for the company from 2024 to 2026 are estimated to be 1.685 billion, 1.960 billion, and 2.242 billion yuan, respectively, with year-on-year growth rates of 21%, 16.3%, and 14.4% [4][16]. Summary by Sections Financial Summary - The company's revenue for 2022 was 11.646 billion yuan, with a projected increase to 14.893 billion yuan in 2024, reflecting a year-on-year growth of 15.2%. The net profit attributable to the parent company is expected to grow from 1.393 billion yuan in 2023 to 1.685 billion yuan in 2024, marking a growth of 21% [5][16]. - The earnings per share (EPS) are projected to be 1.62 yuan in 2024, 1.88 yuan in 2025, and 2.15 yuan in 2026 [4][5][16]. Business Overview - The company maintains a strong market share in the relay industry, with a global market share of 21.3% in 2023, an increase of 7.2 percentage points since 2019. The market shares for power relays and high-voltage direct current relays are 31.9% and over 40%, respectively [4][16]. - The company is implementing a strategy to expand its product categories, focusing on new components such as low-voltage electrical products, connectors, capacitors, fuses, and current sensors, particularly targeting the renewable energy market [4][18]. Market Position and Strategy - The company has established overseas factories in Indonesia and Germany, with the Indonesian factory already achieving stable profitability. The German factory is expected to be completed by the end of 2024, enhancing the company's responsiveness to global market changes [4][16]. - The report emphasizes the company's commitment to maintaining its leading position in the relay market while pursuing an "expand categories" strategy to drive long-term growth [4][16].